Coastal Service Centres Pty Ltd v United Petroleum Pty Ltd

These proceedings involve a dispute between a landlord and tenant concerning the tenant’s exercise, or purported exercise, of an option to renew the lease.

The landlord’s predecessor in title and the Mid-Coast Council apply to be joined to the proceedings. They wish to be heard about the validity or invalidity of the tenant’s exercise of the option because that may affect the quantum of damages that the tenant claims against them in separate proceedings for alleged negligence and historical breaches of the lease.

The applications raise the following questions for determination. Are the former landlord and the Council persons who ought to have been joined as parties to these proceedings, or whose joinder is necessary to the determination of all matters in dispute in these proceedings? If so, are there any discretionary matters that weigh against joining them?

For the reasons that follow, the answer to the first question is: No. The second question does not arise

On or about 7 November 2018, Whitehorn Estates Pty Ltd (Whitehorn) (as lessor) and United Petroleum Pty Ltd (United) (as lessee) entered into a lease of part of the land in folio identifier 12/1019549 (the Lease and the Premises).

The Premises included a service station, convenience store, and associated facilities. Part of the Premises were located in a building on the land known as “The Rock”.

The Lease was for a term of five years, commencing on 1 July 2016 and expiring on 30 June 2021. The Lease included three options for United to renew for a further period of five years each.

In relation to the options to renew, clause 4.4 of the Lease provided (emphasis added):

The Schedule to the Lease provided that the period in which United could exercise the first option to renew was between 1 January 2021 and 1 April 2021. If all three options to renew were validly exercised, the last of the five-year terms would expire on 30 June 2036.

Clause 8.2 of the Lease relevantly provided:

On or about 31 July 2018, “The Rock” building was entirely destroyed by fire. From about 24 December 2018, United operated its business from another area of the land which it is convenient to refer to as the Temporary Premises.

Whitehorn sold the land on which the Premises are situated, and transferred the Lease, to Coastal Service Centres Pty Ltd (Coastal) with effect from 20 June 2019.

In May 2019, United commenced proceedings against Whitehorn in the Common Law Division of this Court, claiming:

In August 2020, United amended its claim in the Common Law Division proceedings by joining Mid-Coast Council (the Council) as a second defendant to those proceedings, claiming damages for alleged negligence in the exercise of the Council’s statutory powers relating to the approval of development applications and fire safety measures.

The damages claimed by United against each of Whitehorn and the Council include damages for loss of profits during the period between the fire and United’s commencement of trading from the Temporary Premises, and loss of profits thereafter due to reduced trading volumes at the Temporary Premises compared to trading volumes at the Premises. United contends, and Whitehorn denies, that the Temporary Premises are substantively less fit than the Premises for the purposes for which it was entitled to use the Premises under the terms of the Lease.

The evidence served by United in support of its claims for loss of profits in the Common Law Division proceedings includes evidence quantifying the profits that United claims it will lose in the following alternative scenarios:

In its defence filed in the Common Law Division proceedings, Whitehorn denies the alleged negligence and also denies that United has suffered loss and damage as a result of the alleged negligence. In paragraph 7 of its Amended Defence filed on 30 November 2022, Whitehorn pleads the following matters in further answer to United’s claim to have suffered loss and damage (emphasis added):

Whitehorn also pleads that it is entitled to set off against any liability that it may be found to have to United (which is denied) amounts of $259,802 and $7,654 in respect of rent and outgoings (respectively) that United allegedly failed to pay to Whitehorn during the period from 24 December 2018 to 20 June 2019 in breach of the Lease.

Whitehorn has filed a cross-claim against United and Coastal in the Common Law Division proceedings. As against United, Whitehorn claims damages for United’s alleged breach of the Lease in failing to pay the rent and outgoings as referred to immediately above. As against Coastal, Whitehorn claims an indemnity or contribution in respect of any liability that Whitehorn may be found to have to United in respect of any loss or damage arising after 20 June 2019, being the date on which Coastal became the registered proprietor of the Premises and the lessor under the Lease.

In its reply to the defence filed by Whitehorn in the Common Law Division proceedings, United pleads that the rent payable under the Lease in respect of the period from 24 December 2018 to 20 June 2019 should be substantially reduced pursuant to clause 8.2 of the Lease. I assume that this was also pleaded in United’s defence to Whitehorn’s cross-claim, but that defence was not part of the evidence before the Court in the present joinder applications.

The Council’s defence to United’s claims in the Common Law Division proceedings denies the alleged negligence and denies that United has suffered any loss or damage as a result of the alleged negligence. In further answer to United’s claim for damages, the Council pleads in paragraph 48 of its further amended defence filed on 9 December 2022 that it (emphasis added):

In its reply filed on 31 January 2023, United joins issue with paragraph 48 of the Council’s defence.

The Common Law Division proceedings have not yet been listed for hearing.

As I have already mentioned, Coastal became the registered proprietor of the Premises and the lessor under the Lease on 20 June 2019.

The present proceedings were commenced in the Equity Division of the Court in November 2019. Coastal sued United to recover amounts of rent and outgoings that it claimed United had failed to pay in the period since 21 June 2019. United had made some payments, but Coastal claimed that the amounts paid fell short of what was owing under the Lease. Coastal’s claim to recover the alleged shortfall did not touch upon Whitehorn’s cross-claim against United in the Common Law Division proceedings for rent and outgoings in respect of the period up to 20 June 2019.

Coastal also claimed a declaration that United was in breach of a term of the Lease that required it to open its business at times that were usual for the kind of business conducted by United. Coastal alleged that usual hours for United’s business were 24 hours, seven days per week.

United’s defence admitted that it had paid rent and outgoings in the amounts set out in Coastal’s claim during the period from 21 June 2019. On the basis that rent is required to be adjusted under clause 8.2.2 of the Lease by reason of the allegedly diminished useability of the Premises following the fire, United denied that it had any further liability to Coastal for rent and outgoings. In its first cross-claim filed on 29 October 2020, United sought declaratory relief concerning the amount of rent payable, adjusted in accordance with clause 8.2.2 of the Lease.

United’s defence also admitted that it was not opening its business 24 hours, seven days per week, but pleaded instead that it was operating during usual business hours for a business of its kind.

On 25 March 2021, United served a notice on Coastal exercising or purporting to exercise the option to renew the Lease for a further term of five years commencing on 1 July 2021 (the Option Notice).

Sections 133E and 133F of the Conveyancing Act 1919 (NSW) (Conveyancing Act) provide:

On 1 April 2021, Coastal served on United a notice pursuant to s 133E stating that, subject to any order of the Court under s 133F, United was precluded from exercising the option to renew because, at the time the Option Notice was served, there were rent and outgoings overdue for payment in the amount of $292,918.31 and United was also in breach of the usual opening hours clause of the Lease (the Prescribed Notice).

At the hearing of the joinder applications, the Court was informed that the amount of $292,918.31 referred to in the Prescribed Notice was the amount of the shortfall in rent and outgoings claimed by Coastal in the Equity Division proceedings. That is to say, Coastal had not relied on any failure by United to pay rent or outgoings to Whitehorn during any period prior to 20 June 2019 as a breach precluding United’s entitlement to the option.

The Court was also informed that United had filed a notice of motion in the Equity Division proceedings on or about 27 April 2021 claiming declaratory or other relief in relation to the validity of the Prescribed Notice and, in the alternative, claiming relief under s 133F of the Conveyancing Act. As will be seen, those claims for relief were subsequently incorporated into the second cross-claim filed by United in the Equity Division proceedings on 4 April 2022.

On 17 January 2022, Coastal and United agreed to settle Coastal’s claims in the Equity Division proceedings and United’s claims in the first cross-claim in the Equity Division proceedings on terms that were reflected in the following declaration and orders by consent entered on 27 January 2022 (as amended on 27 October 2022):

On 18 January 2022, Coastal served on United a document that referred to clause 8.2.3 of the Lease (on the assumption that the Lease had been validly renewed, which remains in dispute) and advised United that Coastal considered that the damage to the Premises was such as to make its repair impracticable or undesirable. The parties refer to this document as the Notice of Consideration, and I will adopt the same convention.

After the declarations and orders were made on 27 January 2022, the only issues remaining to be determined in the Equity Division proceedings are:

United’s contentions pleaded in the second cross-claim (as amended on 1 November 2022) may be summarised as follows:

United claims:

In its defence to the second cross-claim, Coastal:

The second cross-claim has been listed for hearing commencing on 27 July 2023.

Whitehorn and the Council are not, and have never been, parties to the Equity Division proceedings.

United, Whitehorn, the Council and Coastal are all parties to the Common Law Division proceedings, as explained at [13]-[23] above.

By notices of motion filed on 9 December 2022 and 15 December 2022 Whitehorn and the Council apply to be joined to the Equity Division proceedings as the second and third cross-defendants (respectively) to the second cross-claim.

Coastal neither consents to nor opposes the joinder applications.

United opposes the joinder applications.

I have considered all of the parties’ written and oral submissions in relation to the applications.

Whitehorn and the Council rely on rule 6.19, rule 6.24 and/or rule 6.27 of the Uniform Civil Procedure Rules 2005 (NSW).

Rule 6.19 provides:

As United submitted, rule 6.19 applies only to joinder by the moving party on the relevant originating process when some relief is sought by the moving party against the proposed defendant: Walker v Commonwealth Trading Bank of Australia (1985) 3 NSWLR 496 at 503. Rule 6.19 does not apply to the present application by Whitehorn and the Council to be joined to the Equity Division proceedings.

Rule 6.24 relevantly provides:

Rule 6.27 provides:

In order to bring itself within r 6.24, an applicant for joinder must demonstrate that one of the two limbs of r 6.24(1) is satisfied either the applicant “ought to have been joined” (by the plaintiff or relevant moving party), or their joinder is “necessary to the determination of all matters in dispute” in the proceedings. Although joinder under r 6.24 is discretionary, no occasion for the exercise of that discretion arises unless one of the two limbs of r 6.24(1) is satisfied: Burton v Babb [2020] NSWCA 331 at [30]-[32] and [42] (Payne JA and Simpson AJA); AQC Dartbrook Management Pty Ltd v Minister for Planning and Public Spaces (2021) 105 NSWLR 152; (2021) 247 LGERA 318; [2021] NSWCA 112 at [14]-[15] (Meagher and Leeming JJA) and [176]-[179] (Preston CJ of LEC).

The principles articulated by the High Court upholding the appeal by Walker Corporation Pty Ltd in John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; (2010) 84 ALJR 446; (2010) 266 ALR 462; (2010) 2 ASTLR 553; (2010) 4 BFRA 701; [2010] HCA 19 (White City) govern the exercise of the power to join persons as parties to proceedings under r 6.24 and/or r 6.27, including the application of the two limbs of r 6.24(1).

In White City, Poplar Holdings Pty Ltd (Poplar), as nominee of John Alexander’s Clubs Pty Ltd (JACS), acquired an option to purchase land with funds lent by Walker Corporation Pty Ltd (Walker) secured by unregistered mortgage over the land. Relying on a memorandum of understanding that it had entered into with JACS before Poplar acquired the option, White City Tennis Club (the Club) commenced proceedings in this Court seeking a declaration that Poplar held its interest on constructive trust for the Club. Walker was not a party to those proceedings. The Club’s claim was dismissed at first instance, but succeeded on appeal. Walker then applied to the Court of Appeal to be joined as a respondent to the appeal and for orders setting aside the Court of Appeal’s declaration that Poplar held its interest in the land on constructive trust for the Club and ordering Poplar to transfer the land to the Club upon the Club paying a sum equivalent to the price that Poplar had paid to purchase the land as nominee of JACS. The Court of Appeal dismissed Walker’s application, and Walker then appealed to the High Court.

The High Court accepted as correct the general principle that (emphasis added): [1]

The High Court also accepted the correctness of the general proposition that (emphasis added): [2]

The High Court held that the Court of Appeal’s declaration and orders had directly affected Walker. [3] Walker’s entitlement to have the Court of Appeal’s declaration and orders set aside rested on (emphasis added): [4]

The High Court referred to State of Victoria v Sutton (1998) 195 CLR 291; (1998) 72 ALJR 1386; (1998) 156 ALR 579; (1998) 83 IR 1; [1998] HCA 56 (Victoria v Sutton) and News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410; (1996) 139 ALR 193; (1996) 21 ACSR 635; (1996) 35 IPR 446; [1996] ATPR 41-521; [1996] FCA 870 (News Ltd v ARFL) as establishing the general principles referred to above.

Victoria v Sutton concerned an amalgamation agreement between the Builders’ Labourers’ Federation (the BLF) and the Construction, Forestry, Mining and Energy Union (the CFMEU) which purported to dispose of all of the assets of the BLF to the CFMEU. The BLF had earlier been deregistered, and a custodian had been appointed to all of its assets, pursuant to Commonwealth and Victorian legislation. The custodian had taken steps to have the BLF’s funds held on deposit vested in himself, but had not been registered as the proprietor of real property owned by the BLF. The real property remained registered in the name of certain members of the BLF, who held the position of “trustee” under the BLF rules and held the real property on trust for the members of the BLF. An order made by the Victorian Governor in Council under the relevant Victorian legislation provided that any disposition of funds or property of the BLF without the prior written consent of the custodian was void, at the option of the custodian. The custodian was not aware of the amalgamation agreement between the BLF and the CFMEU, and did not consent to the disposition of the BLF’s assets to the CFMEU. The CFMEU commenced proceedings against the custodian in the Industrial Relations Court seeking declarations and orders in relation to the amalgamation agreement and the property of the BLF. The registered proprietors of the real property were not joined as parties to those proceedings and no order was made appointing any members of the BLF to represent the interests of the members of the BLF as a whole. The Industrial Relations Court held that the amalgamation agreement was valid and effective in law and that the CFMEU was beneficially entitled to the BLF’s funds and real property in the possession, custody, or control of the custodian. The custodian was ordered to do all things necessary to vest those funds and property in the CFMEU.

The majority of the High Court (Gaudron, Gummow, and Hayne JJ) held that the funds of the BLF, once vested in the custodian, were beyond the reach of the purported disposition by the BLF to the CFMEU under the amalgamation agreement. A differently constituted majority (Gaudron, McHugh, Gummow, and Hayne JJ) held that the purported disposition of real property under the amalgamation agreement was ineffective because the custodian had avoided the disposition by the pleading in his defence filed in the Industrial Relations Court. McHugh J, writing separately, considered that that the failure to join the registered proprietors of the real property and members of the BLF in a representative capacity as parties to the Industrial Relations Court proceedings was a further reason for setting aside the orders of the Industrial Relations Court. [5] In the passages to which the High Court later referred with approval in White City, McHugh J wrote (at [77]-[78], footnotes omitted and emphasis added):

His Honour held (at [81]):

News Ltd v ARFL concerned a rugby league competition established by News Ltd and Super League Pty Ltd (Super League) to rival the established competition conducted by the Australian Rugby Football League (ARFL) and NSW Rugby League (NSWRL). The proceedings included cross-claims by the ARFL and NSWRL and certain clubs loyal to them (the loyal clubs) against other clubs which had aligned themselves with Super League by making their players and coaches available to a franchisee, which in turn made them available for Super League’s rival competition (the rebel clubs and the franchisees). Those cross-claims concerned alleged breaches of the rebel clubs’ contractual duties to the ARFL and NSWRL, alleged breaches of the rebel clubs’ fiduciary duties in transferring the loyal clubs’ assets to the Super League venture, and alleged inducement or participation by News Ltd and Super League in the rebel clubs’ alleged breaches of contract and fiduciary duties.

The primary judge found in favour of the ARFL and NSWRL and made extensive orders that effectively restrained News Ltd, Super League, and the rebel clubs from conducting the rival competition for five years. The relief granted by the primary judge included declarations and orders to the following effect: [6]

The Super League players and coaches had not been joined as parties to the proceedings.

On appeal, the Full Court of the Federal Court of Australia held that the orders referred to above affected in a direct and substantial way the Super League players’ and coaches’ rights against, and obligations to, their Super League employers, in a way which restricted their freedom to choose the employer for whom they would work. The Full Court held that those orders should be discharged by reason of the failure of the cross-claimants (ARFL, NSWRL and the loyal clubs) to join the Super League players and coaches to the proceedings. [7]

The Full Court referred (at 524) to a fuller extract of the passage from the Privy Council’s decision in Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52; [1969] UKPC 16, to which McHugh J had referred in Victoria v Sutton (emphasis added):

The Full Court continued (at 525, emphasis added):

Whitehorn’s submissions relied on Ross v Lane Cove Council (2014) 86 NSWLR 34; (2014) 199 LGERA 298; [2014] NSWCA 50 (Ross v Lane Cove), in which the Court of Appeal applied the principles in White City and News Ltd v ARFL to proceedings brought in the Land and Environment Court in which a local council sought orders against the former owner of certain land requiring him to demolish unauthorised works on the land and to reinstate the land in accordance with the relevant development consent. Any such orders would require the demolition and reinstatement to be carried out by the former owner. The new owner was not joined to the proceedings. The Land and Environment Court made the orders sought by the local council. The Court of Appeal held that the new owner was a necessary party to the proceedings because she was directly affected by the orders sought by the local council.

In each of the cases referred to above, the party seeking to be joined to the proceedings had a right or liability that would be directly affected by the relief sought in those proceedings.

In White City, Walker had an interest in the land that was the subject matter of the proceedings as equitable mortgagee. The High Court described the Club’s claim for a declaration of constructive trust as “seeking to overreach” Walker Corporation’s interest. [8]

The beneficial interest in the funds and real property that were the subject of the proceedings in Victoria v Sutton belonged either to the members of the BLF or to the members of the CFMEU. That was the question to be determined in the Industrial Relations Court proceedings. The BLF members’ claim to beneficial ownership entitled them to be heard in and joined as parties to those proceedings.

In News Ltd v ARFL, the Super League players and coaches had contractual rights and obligations vis-à-vis their Super League employers. The orders made by the primary judge would affect those rights and obligations in a direct and substantial way, including by altering the party for whose ultimate benefit the players’ and coaches’ obligations were performed and by requiring the Super League employers to withhold payment from players and coaches who failed to comply with requirements that the Court ordered the Super League employers to impose on those players and coaches. Although these effects on the Super League players and coaches were consequential, in the sense that they flowed from the effect on News Ltd, Super League and the franchisees of the orders made against them, they were nevertheless direct effects of those orders on the employment contracts to which the Super League players and coaches were parties. [9]

In Ross v Lane Cove, the new owner was directly affected by the demolition and reinstatement orders sought by the council against the former owner because those orders would require the former owner to enter onto the new owner’s land to carry out the demolition and other necessary work. The orders afforded the former owner a defence of lawful authority to any claim of trespass that the new owner might otherwise have brought in relation to that interference with her possession of the land. In addition, the new owner’s statutory rights to apply for a modification of the development consent (which would retrospectively cure the former owner’s breach) or a building certificate (which would provide some measure of protection) were adversely affected by the injunction granted on the application of the local council, which required demolition by the former owner within a short time frame.

By contrast, it was held in China First Pty Ltd v Mount Isa Mines Pty Ltd [2019] 3 Qd R 173; [2018] QCA 350 (China First) that chargees of a crane, ore unloading equipment and a conveyor belt, which had been left on a part of a wharf at the Port of Townsville formerly licensed to the licensee, were not entitled to be joined to proceedings in which the licensor had sought and obtained orders permitting it to cause that equipment to be dismantled and delivered to the former licensee and requiring the licensee to accept the equipment so delivered. The chargees were not entitled to be joined, notwithstanding that the dismantling and removal of the charged equipment may affect its value, with resulting adverse financial consequences for the chargees. The Queensland Court of Appeal held that these were financial effects, which were consequential in nature. After undertaking a detailed survey of the cases, Gotterson JA (with whom Fraser and McMurdo JJA agreed) said (emphasis added): [10]

The submissions made on behalf of Whitehorn and the Council also referred to Xinfeng Australia International Investment Pty Ltd v GR Capital Group Pty Ltd [2019] NSWSC 1547 (Xinfeng). In that case, Ward CJ in Eq (as the President of the Court of Appeal then was) discussed the principles in White City, News Ltd v ARFL and Victoria v Sutton, and referred to numerous other cases in which those principles have been applied. Each of those cases turned on its own facts, none of which were analogous to the present case in any relevant way.

The subject matter of the Common Law Division proceedings and the subject matter of the Equity Division proceedings have been described in detail earlier in these reasons. I reject the submissions made on behalf of Whitehorn and the Council that the two proceedings involve the same subject matter.

The subject matter of the Equity Division proceedings is United’s claimed entitlement as against Coastal to exercise the option to renew under the Lease or, if it is precluded from doing so by a breach identified in the Prescribed Notice, United’s claim under s 133F of the Conveyancing Act for relief against forfeiture. If the option is declared to have been validly exercised, or if relief is granted under s 133F, then the subject matter extends to Coastal’s rights under clause 8.2.3 of that further lease and whether it is estopped from exercising any such rights.

As United submitted, neither Whitehorn nor the Council have any rights or liabilities in respect of the option or in respect of any new lease to be entered into between United and Coastal if the option is found to have been validly exercised or if relief against forfeiture is granted. The estoppels pleaded by United in the second cross-claim in the Equity Division proceedings are not capable of operating against Whitehorn or the Council. United seeks no relief against Whitehorn or the Council in the Equity Division proceedings.

By reason of s 133E(2)(a) of the Conveyancing Act, the breaches or alleged breaches of the Lease that Coastal may rely on as precluding United from its entitlement to the option to renew are limited to the breaches specified in Coastal’s Prescribed Notice. Those breaches do not include alleged non-payment of rent by United to Whitehorn in the period up to 20 June 2019. The outcome of the Equity Division proceedings will not affect Whitehorn’s cross-claim against United in the Common Law Division proceedings for unpaid rent and outgoings.

There is much force in United’s submission that the judgment entered in favour of United on 27 January 2022 in the Equity Division proceedings determined (in United’s favour) the dispute as to whether United was in breach of the usual operating hours clause of the Lease when it served the Option Notice. However, it is not necessary for me to express any concluded view about that, and I prefer not to do so in circumstances where the very limited observations made by the solicitor appearing for Coastal on the joinder applications left Coastal’s position unclear. [11] If that issue remains in dispute, then any determination in the Equity Division proceedings as to whether United was in breach of the usual operating hours clause as at the date of the Option Notice, and whether any such breach precluded United from exercising the option, will not directly affect any right or liability of Whitehorn or the Council for all of the reasons explained below.

The substance of the submission made by Whitehorn and the Council in support of their respective joinder applications was that the declaration sought by United in the Equity Division proceedings that it had validly exercised the option to renew the Lease would affect the quantum of any damages that Whitehorn or the Council may be ordered to pay United in the Common Law Division proceedings if United succeeds in its claims against Whitehorn for negligence and breaches of the Lease in the period up to 20 June 2019 and in its claims against the Council for negligence, and if United also succeeds in establishing that such negligence and/or breaches caused some loss of profits. If the option to renew was validly exercised, this would extend the period of time during which United may potentially succeed in proving in the Common Law Division proceedings that it has earned less in profits from trading out of the Temporary Premises than it would have earned from trading from the Premises in the counterfactual scenario that there had been no negligence or breach. It was submitted on behalf of Whitehorn and the Council that this potential effect on the quantum of any damages awarded against them in the Common Law Division proceedings is significant in monetary terms. It was submitted that Whitehorn and the Council would be denied procedural fairness if their potential liability to United in the Common Law Division proceedings were to be adversely affected by a declaration made in the Equity Division proceedings that United had validly exercised the option to renew the Lease, without the Court having joined Whitehorn and the Council to the Equity Division proceedings so as to afford them an opportunity to be heard about the validity or otherwise of United’s exercise of the option.

As United submitted, any declaration in the Equity Division proceedings that the Lease was validly renewed will not, by its terms, affect any right or liability of Whitehorn or the Council. Indeed, any such declaration will have only a consequential effect in the sense explained in China First on any liability that Whitehorn and/or the Council may be found to have to United in the Common Law Division proceedings. It will not affect the potential liability itself, but only the potential quantum of damages that may be awarded against Whitehorn and/or the Council if United succeeds in establishing liability for negligence and/or Whitehorn’s alleged breaches of the Lease prior to 20 June 2019.

That is to say, any declaration in the Equity Division proceedings that the Lease has been validly renewed will be one matter that shapes the counterfactual scenario that is relevant to the assessment of damages in the Common law Division proceedings for the loss of profits allegedly suffered by United as a result of Whitehorn’s and the Council’s negligence and Whitehorn’s breaches of the Lease before it transferred the Lease to Coastal on 20 June 2019.

It is relevant to note that other potential outcomes in the Equity Division proceedings may have a similarly consequential effect on any liability of Whitehorn and/or the Council to United in the Common Law Division proceedings. If the Lease is not declared to have been validly renewed in the Equity Division proceedings, then any relief granted to United under s 133F of the Conveyancing Act will affect the counterfactual scenario referred to above. Irrespective of whether a declaration is made or s 133F relief is granted (but assuming one of those two outcomes), the counterfactual scenario referred to above will be affected by the outcome of the claims and defences in the Equity Division proceedings concerning the Notice of Consideration, conventional estoppel, and promissory estoppel.

During the course of the hearing of the joinder applications, there were numerous changes in the submissions made on behalf of Whitehorn and the Council concerning the manner in which they each contended they should be entitled to participate in the Equity Division proceedings in order to protect their “interests”. The final iteration of their submissions may be summarised as follows.

Whitehorn and the Council seek to be joined to the Equity Division proceedings in order to make submissions supporting Coastal’s pleaded defence to the second cross-claim to the effect that, when the Option Notice was issued, United was in breach of its obligations under the Lease to pay rent to Coastal by reason of the shortfall referred to at [24] above, and that clause 4.2.2 of the Lease therefore precluded United from exercising the option to renew. Whitehorn and the Council also wished make submissions supporting Coastal’s pleaded position concerning the validity of its Prescribed Notice. The Council also wished to make submissions opposing any grant of relief to United under s 133F of the Conveyancing Act, although counsel for Whitehorn expressly eschewed the notion that Whitehorn had any interest that entitled it to be heard in relation to s 133F.

Neither Whitehorn nor the Council claimed to have any interest entitling them to be heard in relation to the Notice of Consideration, and United’s contention that Coastal is precluded by conventional estoppel or promissory estoppel from departing from a common assumption or representation that it would not seek to terminate the Lease under clause 8.2.3. That is correct, in my opinion, yet difficult to reconcile with their claim to be entitled to be heard in relation to the validity of the exercise of the option, having regard to the obvious matters referred to at [84] above.

The fact that Whitehorn and the Council wish to be heard only in support of Coastal’s defences in relation to the validity of the exercise of the option and the validity of the Prescribed Notice serves to illustrate that they have no interest in the subject matter of the Equity Division proceedings, and no right or liability that will be directly affected by the Court’s determination of those issues, for the reasons I have explained above. This is also illustrated in relation to s 133F of the Conveyancing Act by the Council’s failure to articulate any reason why any submission that it might make would be relevant to the Court’s exercise of the discretion to grant relief against forfeiture to United in all the circumstances of this case. The Council is a stranger to the relationship between lessee and lessor, and has no other interest in the property that would be affected by the grant of relief under s 133F.

It was submitted on behalf of Whitehorn and the Council that if they are not joined to the Equity Division proceedings then they will not be bound by any declaration made in those proceedings as to the validity of United’s exercise of the option or by any order made under s 133F of the Conveyancing Act granting relief against forfeiture. It was submitted that Whitehorn and the Council would therefore be entitled to agitate for a determination of those issues in the Common Law Division proceedings that may be inconsistent with the determination in the Equity Division proceedings. It was submitted that this would result in undesirable multiplicity of proceedings and, potentially, inconsistent findings. It was submitted that these were further reasons why Whitehorn and the Council should be joined to the Equity Division proceedings.

I reject those submissions. Whitehorn and the Council have no right to be heard in relation to those issues for all of the reasons explained above. No injustice arises from Whitehorn and the Council being excluded from the hearing and determination of those issues merely because that determination in the Equity Division proceedings, after a contested hearing between the only parties to the relevant legal relationship (United and Coastal), may affect the counterfactual scenario for the purpose of assessing any damages for loss of profits in the Common Law Division proceedings. It is not uncommon for events occurring after a cause of action has arisen in tort or contact to be taken into account in the assessment of the damages payable by an unsuccessful defendant if they are material to that assessment: McCrohon v Harith [2010] Aust Torts Reports 82-056; [2010] NSWCA 67 at [54]-[56] (McColl JA, Campbell JA and Handley AJA agreeing). Thus, no multiplicity of proceedings or risk of inconsistent findings arises by reason of Whitehorn and the Council not being parties to the Equity Division proceedings.

For all of those reasons, neither Whitehorn nor the Council are persons who ought to have been joined to the Equity Division proceedings by United or whose joinder is necessary to the determination of all matters in dispute in those proceedings, and there is no other reason that favours joining them to those proceedings pursuant to r 6.27. Their applications to be joined as additional cross-defendants to the second cross-claim in the Equity Division proceedings are dismissed. I am not aware of any reason why costs should not follow the event, but I will hear the parties in relation to costs.